A Rhode Island attorney is seeking clarification on whether he or she can implement a business succession plan that involves transferring his or her law firm equity interest into a revocable trust. The attorney’s law firm equity interest would be held by the trust, and ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing.

The inquiring attorney practices law through a limited liability entity in which he or she owns an equity stake. He or she wishes to transfer his or her law firm equity interest into a revocable trust as part of a business succession plan. However, the attorney is unsure whether the Rules of Professional Conduct permit such a plan.

According to the Panel, an attorney may own his or her law firm equity interest via a revocable trust, as long as he or she is the sole trustee, and the successor trustee and beneficiary are also licensed Rhode Island attorneys in good standing. The Panel finds guidance from other states on the issue that make it clear that a non-lawyer is not permitted to have any kind of ownership interest in a law firm via a revocable trust. Therefore, to comply with Rule 5.4(d)(1), ownership interests at all levels of the trust must be held by licensed Rhode Island attorneys in good standing. As such, the inquiring attorney may transfer his or her equity interest in his or her law firm into a revocable trust, provided that all parties involved meet these requirements.